US President Joe Biden plans to send a bill to Congress that will include a historic tax hike for the “richest” people that would take 39.6% of their income.
According to sources consulted by the agency Reuters, The Democratic politician wants to finance his plans for child care, universal preschool education and paid leave for workers around, with an extra trillion dollars that would be raised with the increase in taxes.
Specifically, the proposal requires increasing the maximum marginal tax rate on income to 39.6% from 37%. This would apply to those who earn more than $ 400,000 a year. In addition, the tax reform plan would almost double capital gains taxes and also set it at 39.6% for people earning more than 1 million.
The category of “historical” comes into account because it would be the highest tax rate on investment earnings, since that instrument was created in the 1920s. The tax rate has not exceeded 33.8% in the era after the Second World War.
White House press secretary Jen Psaki said the president will discuss his “Plan for American Families” during his speech to Congress on Wednesday. With the announcement that the proposal would be prepared for next week, sharp falls were registered in the Wall Street stock market.
Many of Biden’s tax changes are designed to reverse some of the changes included in the Tax Cuts and Jobs Act passed under President Donald Trump in 2017.
In 2017, the corporate tax rate fell from 35% to 21% under the Trump administration, a sharp drop from 40% that helped drive an increase in the national deficit and led to record share buybacks in US corporations.
However, any modification to fiscal policy would have to go through Congress, where the Democratic Party has a majority in the House of Representatives, but a tie in the Senate, although the vote of Vice President Kamala Harris decides there. Analysts say it is not clear if all Democratic senators would approve such a tax reform.
Throughout his election campaign, Biden vowed not to raise taxes on households that earn less than $ 400,000 a year.